Rochester Sports and Entertainment Arena Strategic Feasibility Study
STRATEGIC FEASIBILITY STUDY MAY 6, 2015 FEASIBILITY TEAM INTRODUCTION
PAGE 1 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Hammes Company is a full‐service real estate development and investment firm. We have been directly involved in leading several of the largest and most complex sports and entertainment destinationprojectsintheindustryoverthe past decade.
PAGE 2 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Hammes Company is one of America’s leading real estate advisory, development and investment companies. Our primary business is working with leading institutions – both public and private – to devise and execute community economic development and investment strategies.
Mayo Clinic Minnesota Sports Facility Authority / Minnesota Vikings
National Football League City of Allentown, Pennsylvania
Green Bay Packers Detroit Lions State of Wisconsin Ford Family University of Wisconsin – Madison Tisch Family Interests / NY Giants
Milwaukee Bucks Robert Wood Johnson IV / NY Jets
Cleveland Browns University of Southern California
PAGE 3 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Sink Combs Dethlefs has a long standing reputation for excellence in event facility design. Over the Past 53 years, we have designed:
50+ Arenas & Event Centers
250+ Sports & Entertainment Projects
Projects in 31 States & 5 Countries
45+ Nationally Award‐Winning Projects
PAGE 4 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Sink Combs Dethlefs understands the functional aspects of an entertainment venue: the moving parts, that make a building or complex successful. The vision; the atmosphere; the impression it leaves; is one of the defining aspects of a facility and the one of the hardest to achieve. It takes great consideration of space and place. The building must function to a degree that function goes unnoticed for the atmosphere of a campus venue to shine through.
Target Center Inner Mongolia Event Center
Crisler Center Chesapeake Energy Arena
PPL Center Erie Insurance Arena
Cross Insurance Arena 1st Bank Event Center
Cedar Park Events Center Independence Event Center
MTS Centre Denny Sanford Premier Center
The Schottenstein Center Robins Center
PAGE 5 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Since 1996, Johnson Consulting has been serving public‐ and private‐sector clients in North America and worldwide. Our clients include state, county, and municipal governments, sports franchise owners and teams, convention and visitors bureaus, asset and portfolio managers, financial institutions, private‐ sector developers, and universities and colleges.
PAGE 6 INTRODUCTION
PAGE 7 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Introduction / Statement of the Problem: Although the $79 million of Civic Center improvements currently under construction are significant, the City of Rochester is still in need of a modern multi‐purpose community arena, which would add significant support to the success of to the Civic Center complex as well as helping to establish Rochester as a major regional destination for business, hospitality, entertainment and sports.
Benefits of New Arena: • A vibrant and flexible downtown gathering place for the Rochester community
• Significant return on public investment, including economic and fiscal impacts
• Increased diversity and number of arena events
• Increased overall visitation and activity for downtown Rochester
• Hotel room nights
• Restaurant and bar revenue
• Support service revenue
• Retail activity
• New Jobs
PAGE 8 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Key Issues:
• Taylor Arena, the existing venue added to the Civic Center in 1986, can only accommodate a maximum of 3,400 patrons in permanent seats and up to approximately 4,900 patrons when temporary chairs are added.
• The sightlines from the permanent seating positions are poor for most events as compared to modern arenas and concert venues.
• Operational flexibility is limited for many event types, including concerts, family shows, hockey and other sports. Promotors do not like the configuration.
• Arena and adjacent park areas need to work together to create operational synergies and new event opportunities.
• Due to these limitations and its age, the Taylor Arena is nearing functional obsolescence and is not allowing Rochester to reach its full potential as a regional destination for entertainment and sports – as well as the significant collateral benefits that are associated with these events.
PAGE 9 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Overview of the Study: This study provides a vision for a new, state of the art, multi‐purpose arena at the Mayo Civic Center.
• Evaluation of the Rochester market and potential demand to support the arena and specific arena uses including USHL, concerts, trade shows, family shows and other events.
• Provide preliminary recommendations for arena size, configuration, program and potential enhancements (e.g. connections to the adjacent park and convention center).
• Create target budget ranges for several arena options
• Discuss of potential economic impacts of the proposed arena.
• Provide a preliminary development schedule and discuss next steps.
PAGE 10 MARKET ASSESSMENT
PAGE 11 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Market Assessment Overview: We have engaged Johnson Consulting, based in Chicago, to provide market data related to the USHL, concerts, family shows, trade shows and other events due to their familiarity with the upper Midwest market.
• Assessment of Median Household Income and employment base in comparison to national averages and other competing markets. This is good indicator of greater levels of disposable income for entertainment spending.
• Evaluation of average USHL attendance per game in other markets as an indicator for potential attendance ranges in Rochester.
• Preliminary assessment of demand for concerts, family shows and other events
• Preliminary assessment of potential demand ranges for premium seating including Suites, Club Seats and Loge Boxes.
• Identification of future study needs including user surveys and promoter surveys to better understand detailed demand by segment (Premium, GA other), pricing and event mix.
PAGE 12 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Market Overview MARKET ANALYSIS OF ROCHESTER, MN ARENA
• Strong Population Growth of Historic & Current Population - City of Rochester (2000-2015) % Gr ow t h % Gr ow t h CAGR* 2000 2010 2015 1.3% annually since 2000 2000-2010 2010-2015 2000-2015 U.S. 281,421,906 308,745,538 318,536,439 9.7% 3.2% 0.8% • Both City (1.3%) and MSA Minnesota 4,919,479 5,303,925 5,442,213 7.8% 2.6% 0.7%
(1.0%) are growing at a rate Rochester MSA 184,740 206,877 213,487 12.0% 3.2% 1.0%
faster than the rest of City of Rochester 91,816 106,769 110,887 16.3% 3.9% 1.3%
Minnesota (0.7%) * Compounded Annual Grow th Rate Source: Esri ArcGIS BAO, Johnson Consulting • Very Strong Median Household Income ($64,146 Rochester vs Median Household Income - City of Rochester (2015-2020)
$53,217 National), a key % Growth CAGR* 2015 2020 indicator for greater levels of 2015-2020 2015-2020
disposable income for U.S. $53,217 $60,683 14.0% 2.7%
entertainment spending Minnesota $60,056 $70,243 17.0% 3.2%
• Strong Growth in Median Rochester MSA $63,939 $75,688 18.4% 3.4% Household Income is projected Rochester City $64,146 $75,457 17.6% 3.3% * Compounded Annual Growth Rate Source: Esri ArcGIS BAO, Johnson Consulting
PAGE 13 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
2015 MEDIAN HOUSEHOLD INCOME BY ZIP CODE
PAGE 14 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Largest Employers - Rochester MSA MARKET ANALYSIS OF ROCHESTER, MN ARENA
Employer Industry Employees Unemployment Rate - Olmsted County (2004-2013) Mayo Clininc Health Care 35,000 IBM Electronic 4,400* Olmsted County Minnesota Rochester City Rochester MSA U.S. Rochester Public Schools Education 2,460 Rate Change Rate Change Rate Change Rate Change Rate Change Olmsted County Government 1,204 2010 5.9% - 7.4% - 5.9% - 6.3% - 9.6% - Olmsted Medical Center Health Care 1,200 Mobile Concrete mixers, McNeilus Truck & Manuf 1,050 garbage trucks 2011 5.3% (0.6) 6.5% (0.9) 5.3% (0.6) 5.6% (0.7) 8.9% (0.7) Charter Communications Communications 873 City of Rochester Local Government 840 2012 4.4% (0.9) 5.6% (0.9) 4.4% (0.9) 4.6% (1.0) 8.1% (0.8) Kahler Hospitality Group Hotel/Restaurant Services 680 4.9% (0.7) 4% (0.4) 4.2% (0.4) 7.4% (0.7) Crenio Fabricated Metal 652 2013 4.0% (0.4) RCTC Post Secondary Education 500 2014* 3.4% (0.6) 4.1% (0.8) 3% (0.6) 3.6% (0.6) 6.2% (1.2) Federal Medical Center Corrections/Medical 450 Refrigerated Lunch & Reichel Foods 450 *December 2014 is most recent data available Snacks Source: Bureau of Labor Statistics, Johnson Consulting Samaritan Bethany, Inc. Health Care 440 Seneca Food Food Processing 400 Benchmark Electronics Design/Engineering 396 Hiawatha Homes Res.Services 380 Kemps Food Processing 341 McNeilus Steel, Inc Steel Fabrication 321 Market Overview Cardinal of Minnesota, Ltd Res/Services 300 Pace Dairy Food Processing 280 • Halcon Manufacturing 255 City of Rochester has very low unemployment rate of 3% Think Bank Banking 250 which is about half of the national average of 5.2% Rochester Meat Company Meat Processor 250 Bard Medical Manufacturing 250 • Relatively high median income levels for local and regional *Noted on IBM website population base Source: Rochester Area Economic Development, Johnson Consulting
PAGE 15 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
REGIONAL FACILITIES
Competive Regional Venues within 120 Miles/ 2 Hr Drive Time Venue Year Opened # of Seats Distance from Rochester Location La Crosse Center 1980 5,000-7,500 70 LaCrosse, WI Xcel Energy Center 2000 18,568 80 St. Paul, MN Verizon Wireless Center 1995 5,280 80 Mankato, MN Target Center 1990 19,356 85 Minneapolis, MN Young Arena 1994 3,000 119 Waterloo, IA UNI-Dome 1976 16,324 120 Cedar Falls, IA Sources: Johson Consulting, Facility Websites, Mapquest
Market Overview ‐ Conclusions
• Opportunity for Rochester to have the best and most flexible medium‐size arena within 120‐mile radius
• Would be highly competitive geographically for sports, concerts, festivals, trade shows, family shows and other events
PAGE 16 ARENA DEVELOPMENT TRENDS & USHL OVERVIEW
PAGE 17 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
USHL DEMOGRAPHIC COMPARISON USHL Profile (City) USHL Markets Rank out • Rochester is consistent with or Demographic Variable Rochester Averaof 17geHighLow Population 110,887 7 120,675 422,895 18,623 above average in keyTotal Households 45,067 7 48,412 168,838 6,378 Median Household Income $64,146 2 $48,766 $79,896 $24,982 demographic variablesEntertainment as Spending $34,878,289 5 $28,529,468 $94,190,028 $3,799,214 compared to otherCorporate USHL Inventory 4,924 7 5,742 20,630 1,646 markets Rank out Demographic Variable Rochester USHLof 17 Markets(25 mi Average Radius) High Low Population 206,327 13 725,250 6,685,461 63,107 Total Households 81,627 13 279,773 2,503,248 25,188 Median Household Income $65,921 1 $54,746 - $41,640 Entertainment Spending $61,343,335 9 $200,415,719 $2,023,280,689 $12,668,127 Corporate Inventory 8,769 12 5,742 1,646 20,630
Rank out Demographic Variable Rochester of 17 Average High Low Population 213,487 11 9,557,057 906,017 54,667 Total Households 91,785USHL 11 Markets(MSA 344,171 ) 292,158 28,132,666 Median Household Income $63,939 1 $53,308 - $40,764 Entertainment Spending $61,254,719 9 $245,064,075 $2,727,239,308 $10,967,131 Corporate Inventory 9,404 11 37,184 385,105 2,902
PAGE 18 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
USHL MARKET ANALYSIS USHL Historical Average USHL Market Population and Average Team Attendance (2012-2015) Attendance per Game 3YR % of Historical City Attendance Population Historical Avg Attend to • 3 ‐ Year Average USHL Team* Market 2012-13 2013-2014 2014-15Avg per GM Population Attendance per Game = Youngstown Phantoms Youngstown, OH 63,562 1,371 1,402 1,410 1,394 2.19% Chicago Steel Bensenville, IL 18,623 1,402 1,420 1,410 1,411 7.57% Bloomington Thunder Bloomington, IL 79,119 N/A N/A 2,028 2,028 2.56% 2,914 Muskegon Lumberjacks Mus kegon, MI 37,699 2,342 2,208 2,089 2,213 5.87% Des Moines Buccaneers Urbandale, IA 43,067 2,578 2,394 2,414 2,462 5.72% • Percent of Average Dubuque Fighting Saint Dubuque, IA 59,085 2,562 2,606 2,527 2,565 4.34% Waterloo Black Hawks Waterloo, IA 69,552 2,667 2,693 2,425 2,595 3.73% Attendance per game to Tri-City Storm Kearney, NE 32,208 2,426 2,683 2,704 2,604 8.09% population = 3.03% Cedar Rapids Rough Riders Cedar Rapids, IA 129,383 2,663 2,655 2,735 2,684 2.07% Sioux City Musketeers Sioux City, IA 83,018 2,523 2,886 2,774 2,728 3.29% • 121,287 2,798 2,795 2,850 2,801 3.63% Applying USHL average Madison Capitols Madison, WI 240,627 N/A N/A 3,244 3,244 1.35% Average percentage to Rochester’s Green Bay Gamblers Green Bay, WI 104,952 3,315 3,450 3,416 3,394 3.23% population = Omaha Lancers Omaha, NE 422,895 3,587 3,324 3,301 3,404 0.80% Lincoln Stars Lincoln, NE 270,141 3,949 3,642 3,197 3,596 1.33% 110,887 Fargo Force Fargo, ND 118,456 3,902 3,515 3,543 3,653 3.08% x 3.03% Sioux Falls Stampede Sioux Falls, SD 168,198 3,884 4,256 6,376 4,839 2.88% 110,887 -- -
3,361 * Rochester, MN
* Excludes USA Development Team * Potential per **2014-2015 Expansion Teams game attendance Source: ESRI, Pointstreak, Johnson Consulting
PAGE 19 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
• Avg Ratio of USHL MARKET ANALYSIS United States Hockey League Attendance per Comparison of USHL Arenas & Markets % of Avg per City 25 Mile 3YR Avg. per Year 25 Mile GM Ratio of Avg Ratio of Avg game to 25 MI Team Hockey Arena Location Population Capacity* GM Opened Population Attendance Attend to Attend to Attendance Radius population = to Capacity Population Population Denny Sanford Premier Sioux Falls Stampede Sioux Falls, SD 2014 168,198 244,041 10,600 4,839 46% 1.21% Center 2.88% 1.98% Omaha Lancers Ralston Arena Omaha, NE 2012 422,895 858,595 4,000 3,404 85% 0.80% 0.40% Applying league Dubuque Fighting Saints Mystique Ice Center Dubuque, IA 2010 59,085 157,900 3,079 2,565 83% 4.34% 1.62% Avg Attend to Des Moines Buccaneers Buccaneer Arena Urbandale, IA 2008 43,067 606,369 3,408 2,462 72% 5.72% 0.41% Fargo Force Scheels Arena Fargo, ND 2008 118,456 221,888 5,000 3,653 73% 3.08% 1.65% League Avg Pop Bloomington Thunder U. S. Cellular Coliseum Bloomington, IL 2006 79,119 222,325 7,000 2,028 29% 2.56% 0.91% Ratio = Youngstown Phantoms Covelli Centre Youngstown, OH 2005 63,562 661,432 5,717 1,394 24% 2.19% 0.21% Sioux City Musketeers Tyson Event Center Sioux City, IA 2003 83,018 158,428 9,500 2,728 29% 3.29% 1.72% 206,327 Green Bay Gamblers Resch Center Green Bay, WI 2002 104,952 466,102 8,709 3,394 39% 3.23% 0.73% x 1.21% Cedar Rapids RoughRiders Cedar Rapids Ice Arena Cedar Rapids, IA 2000 129,383 385,045 4,000 2,684 67% 2.07% 0.70% Tri-City Storm Viaero Events Center Kearney, NE 2000 32,208 63,107 5,000 2,604 52% 8.08% 4.13% 2,502 per game Chicago Steel Edge Ice Arena Bensenville, IL 1997 18,623 6,685,461 3,000 1,411 47% 7.58% 0.02% attendance Lincoln Stars The Ice Box Lincoln, NE 1995 270,141 339,749 5,010 3,596 72% 1.33% 1.06% Waterloo Black Hawks Young Arena Waterloo, IA 1994 69,552 195,212 3,000 2,595 87% 3.73% 1.33% Expected range of Madison Capitols Alliant Energy Center Madison, WI 1967 240,627 577,164 7,890 3,244 41% 1.35% 0.56% Muskegon Lumberjacks L. C. Walker Arena Muskegon, MI 1960 37,699 280,104 5,100 2,213 43% 5.87% 0.79% per GM attend = Average 1999 121,287 362,497 5,626 2,801 56% 3.63% 1.21% 2,500 – 3,500 Rochester 110,887 206,327 4,028 2,502 * Hockey Capacity Source: USHL, Individual Venue Sites, Johnson Consulting
PAGE 20 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY NEW ARENA DEVELOPMENT TRENDS
New Arenas Since 2003 with Less Than 10,000-seat Capacity
# of Annual Median Entertainment EstimatedYear # of Club Facility Name MSA Population Tenant(s)Total Capacity Naming Luxury Naming Income Spending Term OpenedCost Seats Rights Suites Ri Denny Sanford PREMIER Center Sioux Falls, SD ghts (millions) 248,891 $55,002$60,526,781 USHL, IFL 12,000* 38 500** - - - $150 2014 PPL Center Allentown-Bethlehem-Easton, PA-NJ 835,683 $58,477 $224,607,036 AHL 8,500 36 986 - 10 - $272 2014 Cross Insurance Center Bangor, ME 156,378 $40,861 $28,657,652 None 8,078 12 - $200,000 15 $3,000,000 $65 2013 Cedar Park Center Austin-Round Rock, TX 1,917,917 $62,597 $546,603,306 AHL, NBADL 6,660 22 541 - - - - 2009 ShoWare Center Seattle-Tacoma-Bellevue, WA 3,629,702 $68,802 $1,182,479,316 WHL, WFTDA 7,500 20 500 $317,500 10 $3,175,000 $68 2009 Huntington Center Toledo, OH 607,965 $44,818 $130,504,672 ECHL 8,000 20 - $300,000 7 $2,100,000 $105 2009 Town Toyota Center Wenatchee, WA 114,715 $51,850 $23,460,682 NAHL, IFL 5,000 26 397 $200,000 5 $1,000,000 $45 2008 U.S. Cellular Arena Bloomington, IL 192,567 $59,983 $50,080,652 MISL,USHL 7,000 24 700 $345,000 6 $2,070,000 $37 2006 1st Bank Center Denver-Aurora-Lakewood, CO 2,703,067 $64,675 $847,956,846 None 6,000 25 900 - 5 - $45 2006 Santa Ana Star Center Albuquerque, NM 907,398 $48,813 $205,378,292 NAHL, IFL 6,500 26 500 $500,000 5 $2,500,000 $43 2006 Tim's Toyota Center Prescott, AZ 220,671 $43,284 $42,889,379 CHL, AIF 5,100 20 500 $175,000 10 $1,750,000 $24 2006 Stockton Events Center Stockton-Lodi, CA 711,503 $53,784 $141,724,907 ECHL, AIF 10,000 24 500 - - - $45 2005 Covelli Centre Youngstown-Warren-Boardman, OH-PA 552,952 $41,103 $100,443,018 USHL, WFTDA 5,700 24 500 $120,000 3 $360,000 $41 2005 Texas A&M-CC, American Bank Center Corpus Christi, TX 445,656 $48,010 $86,828,124 6,000 11 302 - 10 Not Discolsed $50 2004 NAHL, LSFL Budweiser Events Center Fort Collins-Loveland, CO 320,463 $60,647 $91,878,995 ECHL, IFL 5,211 24 777 $75,000 20 $15,000,000 $25 2003 Comcast Arena At Everett Events Center Seattle-Tacoma-Bellevue, WA 3,629,702 $68,802 $1,182,479,316 WHL, NLL, RDCL 8,250 20 750 $740,000 10 $7,400,000 $63 2003 State Farm Arena McAllen-Edinburg- Mission, TX 838,600 $34,176 $93,826,543 CHL, LSFL 5,500 25 500 $200,000 5 $1,000,000 $20 2003 ECHL, WCC, WAC, Orleans Arena Las Vegas-Henderson-Paradise, NV 2,083,955 $52,541 $454,919,669 LFL
Average
7,000 22 220 - - - $150 2003 , PASL-Pro Ford Arena Beaumont-Port Authur, TX 413,556 $46,025 $76,547,042 ABA 8,200 15 750 $250,000 5 $1,250,000 $70 2003 Tyson Events Center Sioux City, IA-NE-SD 171,347 $50,336 $32,728,056 USHL, APFL 10,000 27 0 $200,000 20 $4,000,000 $28.10 2003 1,035,134 $52,729 $280,226,014 7,063 23 548 278,654 9 3,431,154 71 2,007 2007
*10,600 Hock ey Capacity (Only Profiled Facility w/10,000+ capacity) Estimated based on Stadium Map Source: RSV, Respective Venues, Johnson Consulting
PAGE 21 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY CLUB LEVEL & SUITES OVERVIEW United StatesUnited Hockey States League Hocke y Lea gue ComparisonComparison of USHL Arenas of USHL & Markets Arenas & Markets
Year Team Hockey Arena Location Population Capacity* # of Suites Opened
Sioux Falls Stampede Denny Sanford Premier Center Sioux Falls, SD 2014 168,198 10,600 22
Omaha Lancers Ralston Arena Omaha, NE 2012 422,895 4,000 12 Dubuque Fighting Saints Mystique Ice Center Dubuque, IA 2010 59,085 3,079 11 Des Moines Buccaneers Buccaneer Arena Urbandale, IA 2008 43,067 3,408 2
Fargo Force Scheels Arena Fargo, ND 2008 118,456 5,000 38 Bloomington Thunder U. S. Cellular Coliseum Bloomington, IL 2006 79,119 7,000 2 Youngstown Phantoms Covelli Centre Youngstown, OH 2005 63,562 5,717 26
Sioux City Musketeers Tyson Event Center Sioux City, IA 2003 83,018 9,500 30 Green Bay Gamblers Resch Center Green Bay, WI 2002 104,952 8,709 25 Cedar Rapids RoughRiders Cedar Rapids Ice Arena Cedar Rapids, IA 2000 129,383 4,000 7
Tri-City Storm Viaero Events Center Kearney, NE 2000 32,208 5,000 20 Chicago Steel Edge Ice Arena Bensenville, IL 1997 18,623 3,000 9 Lincoln Stars The Ice Box Lincoln, NE 1995 270,141 5,010 2 14 Waterloo Black Hawks Young Arena Waterloo, IA 1994 69,552 3,000 0
Madison Capitols Alliant Energy Center Madison, WI 1967 240,627 7,890 8 PAGE 22 Muskegon Lumberjacks L. C. Walker Arena Muskegon, MI 1960 37,699 5,100 12
Average 1999 121,287 5,626
Rochester 110,887 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
PREMIUM INVENTORY ASSESSMENT: Based on comparable arenas in similar markets, including USHL arenas, the Market Assessment indicates the following Premium Inventory for the Arena could be supportable:*
Club Seats: 500 to 700 Seats Upgraded seats with sideline location, convenient access to adjacent club lounge with enhanced food service. Generally includes premium parking.
Suites: 12 to 20 Suites (including 1‐2 Party Suites for daily rental, which may contain additional seats) Private, enclosed suites including premium finishes and furniture with 12 to14 seating positions including drink rail seating. Generally includes premium parking.
Loge: 8 to 14 Loge Boxes Semi‐Private open boxes with 4 to 6 seating positions including upgraded movable chairs, standing room and drink rails or tables. Seats have a sideline location, convenient access to the club lounge and enhanced food service. Generally includes premium parking.
Note: Additional study and research is required to finalize the premium inventory and establish demand or pricing, including individual user surveys, corporate surveys and focus groups.
PAGE 23 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY SUMMARY AND CONCLUSIONS:
• Strong Median Household Income ($64,146 Rochester vs $53,217 National), and growth is a key indicator for greater levels of disposable income for entertainment spending.
• Solid employer base anchored by Mayo Clinic is a key indicator of demand for all event types as well as premium seating demand.
• 3 ‐ Year Average USHL Attendance per Game is approximately 2,800. Johnson Consulting’s analysis indicates average USHL attendance in Rochester may be in the range at 2,500 to 3,500 per game when certain adjustments are made to account for larger markets.
• The USHL is a viable and growing league that is much stronger than it was in 2002.
• Suite count in comparable markets and recent arenas is generally 12 ‐ 24 Suites. Mayo may favor Non‐Suite premium seating such as Loge Boxes and Club Seats
• Loge Boxes are a strong trend Nationally and appear to be supportable in Rochester. Potential Inventory could be projected at 8 to 14 Loge Boxes with 4 to 6 seats each.
• Club Seat range in comparable markets and recent arenas is generally 500 to 900. Higher end of the range appears to be supportable in Rochester.
PAGE 24 ARENA CONCERT MARKET OVERVIEW
PAGE 25 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Industry Trends ‐ Concerts INDUSTRY TRENDS –CONCERTS • Only a small number of acts in the industry that can sellout larger venues
• Solid market of potential concerts to draw from with a midsize arena (5,000 to 9,000 +/‐ 94% of Top 101 to 200 grossing tours )
• National Promoters favor the Rochester Market and would like to have more events here if a new downtown arena was constructed.
PAGE 26 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Industry Trends INDUSTRY TRENDS –FAMILY EVENTS
• Discussions with promoters from Feld Entertainment were very optimistic for the Rochester marketplace as it relates to their desire to host shows at a new venue
• Such family shows as the WWE are already preforming in the Rochester marketplace, which is a strong indicator given their historically higher than average ticket price per event
PAGE 27 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Industry Trends –Flexible Arena Configuration
PAGE 28 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Johnson Consulting expects that the following projections are reasonable based on comparable facilities and their knowledge of the market for concerts and other arena events
PROJECTED DEMAND Projected Demand for Proposed Arena Rochester, MN Worst CaseWorst Case Base Case Base Case Best Best CaseCase Avg.Avg. Total AAvg.vg. TotalTotal Avg.Avg. TotalTotal # of# ofEvents EventsAttendance Attendance AttendanceAttendance # #of ofEvents EventsAttendanceAttendance Attendance # of # Eventsof EventsAttendanceAttendance AttendanceAttendance Sports Tenant 32 2,500 80,000 32 3,000 96,000 32 3,500 112,000 Family Shows 16 3,300 51,975 19 3,500 66,150 21 4,000 84,000 Concerts 8 6,000 49,500 10 7,200 71,280 11 8,000 88,000 Non Tenant‐Sport Events 25 2,500 62,500 30 3,000 90,000 35 3,500 122,500 Flat‐Floor Events 5 2,625 13,781 6 3,150 19,845 7 3,500 24,500 Sources: Johnson Consulting 25 30 35 GraduationsAssumes / Civica USHL team as a Sports Tenant; certain events3 including: flat‐floor 3,000 events, non tenant‐sports 9,000 events, family shows and 3 others may be multi 3,600‐day events. 9,720 3 4,000 12,000 Banquets / Meetings / Parties 8 188 1,547 10 225 2,228 11 250 2,750 Other 5 3,375 17,719 6 4,050 25,515 7 4,500 31,500
Total 102 ‐ 286,022 116 ‐ 380,738 127 ‐ 477,250
Sources: Johnson Consulting and Mayo Civic Center Assumes a USHL team as a Sports Tenant; certain events including: flat‐floor events, non tenant‐sports events, family shows and others may be multi‐day events.
PAGE 29 PRELIMINARY ARENA PROGRAM OVERVIEW
PAGE 30 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
ARENA PROGRAMMING OPTIONS Seat Count Description Telescopic Fixed Premium Total Total Seating Option 1A Diagonal, Main Level 950 1,700 800 4,000 141,242 SF Concourse, 2 Level
Option 1B Diagonal, Main Level 1,500 2,700 800 5,000 150,000 SF Concourse, 2 Level
Option 2A Diagonal, Elevated 1,975 3,434 1,100 6,500 194,546 SF Concourse, 3 Level
Option 2B Diagonal, Main Level 1,660 3,640 700 6,000 156,180 SF Concourse, 2 Level
Option 2C Diagonal, Main Level 1,660 3,640 700 6,000 177,705 SF Concourse, 2 Level, Practice Court
Option 3 East‐West, Elevated 2,230 2,570 1,000 5,800 191,549 SF Concourse, 3 Level
PAGE 31 OPTION 1A: 4,000 SEATS
PAGE 32 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Option 1A ‐ 45 degree SE Site Orientation with the Event / Concourse at Street Level Levels – (2 total) Shared Event ‐ Concourse Level / Suite Level Seating Capacity Hockey – 4,000 seats Seating Capacity Basketball – 4,650 seats Seating Capacity Concerts (end stage configuration)– 4,800 seats Trade Events (flat floor) ‐ 27,000 Sq. Ft. (160) 10x10 Booths Building Area – 141,242 (Gross SF) Special Features ‐ ¾ (horseshoe) Bowl configuration (reduces square footage but keeps the arena integrity) / 50’ clear to underside of truss / Center‐hung scoreboard optional / Exterior Views to the park / Optional exterior amphitheater seating for 2,500 patrons / Flexible event configurations / End stage balcony style seating. Connections and Synergies between elements – Connection to the Mayo Civic Center at the SW Event and Suite Level / Shared Loading / Shared Commissary / Direct access to the park. Pros – Lowest Square Footage of the options / Exterior views to the park / Site Orientation / Reduced amount of trees being removed from the park. Cons – Challenging Capacity for attracting larger concerts / does not allow for future growth / reduced end stage concert capacity due to stage placement / reduced concourse circulation.
PAGE 33 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
TOWN TOYOTA CENTER (WENTACHEE)
PAGE 34 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
TYPICAL CONCOURSE – DODGE CITY
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Option 1A: ‐ 4,000 Seats ‐ Main Level Concourse ‐ 2 Seating Levels
PAGE 36 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Option 1A: 4,000 Seats ‐ Event / Concourse Level
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Option 1: 4,000 Seats ‐ Suite Level
PAGE 38 OPTION 1B: 5,000 SEATS
PAGE 39 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Option 1B –45 degree SE Site Orientation with the Event / Concourse at Street Level Levels – (2 total) Shared Event ‐ Concourse Level / Suite Seating Capacity Hockey – 5,000 seats Seating Capacity Basketball – 6,000 seats Seating Capacity Concerts (end stage configuration)– 6,200 seats Trade Events (flat floor) – 32,000 Sq. Ft. (185) 10x10 Booths Building Area – 150,000 (Gross SF) Special Features ‐ 360 degree Bowl configuration / 50’ clear to underside of truss / Center‐hung scoreboard optional / Exterior Views to the park / Ideal site orientation / Optional exterior amphitheater seating for 2,500 patrons / Flexible event configurations / Loading Dock Connections and Synergies between elements – Connection to the Mayo Civic Center at the SW Event and Suite Level / Shared Loading / Shared Commissary / Direct access to the park. Pros – Site Orientation / Reduced Square Footage / Allows Future Growth / Cost per seat reduction due to reduced amount of Telescopic seating locations. Cons – Borderline Capacity for attracting larger concerts / does not allow for future growth / reduced concourse circulation.
PAGE 40 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
TIM’S TOYOTA CENTER (PRESCOTT VALLEY)
PAGE 41 OPTION 2B: 6,200 SEATS BASE SCHEME
PAGE 42 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Option 2B –45 degree SE Site Orientation with the Event / Concourse at Street Level Levels – (2 total) Shared Event ‐ Concourse Level / Suite Seating Capacity Hockey – 6,200 seats Seating Capacity Basketball – 7,200 seats Seating Capacity Concerts(end stage configuration)– 7,800 seats (approximately 2,000 seat increase) Trade Events (flat floor) – 32,000 SF (185) 10x10 Booths (approximately 7,500 SF increase) Building Area – 156,180 (Gross SF) Special Features ‐ 360 degree Bowl configuration / 50’ clear to underside of truss / Center‐hung scoreboard optional / Exterior Views to the park / Ideal site orientation / Optional exterior amphitheater seating for 2,500 patrons / Flexible event configurations / Loading Dock Connections and Synergies between elements – Connection to the Mayo Civic Center at the SW Event and Suite Level / Shared Loading / Shared Commissary / Direct access to the park. Pros – Site Orientation / Capacity for attracting larger concerts / Reduced Square Footage / Allows Future Growth / Reduced amount of trees being removed from the park / Cost per seat reduction due to reduced amount of Telescopic seating locations. Cons – Currently not planned to have exterior amphitheater style seating at an additional cost.
PAGE 43 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
CEDAR PARK EVENT CENTER
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ALLEN EVENT CENTER
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TYPICAL CONCOURSE – INDEPENDENCE EVENT CENTER
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DENNY SANFORD PREMIER CENTER (SIOUX FALLS)
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Option 2B: Base Scheme ‐ 6,200 Seats ‐ Main Level Concourse ‐ 2 Seating Levels
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Option 2B: Base Scheme ‐ Event / Concourse Level
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Option 2B: Base Scheme ‐ Suite Level
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Option 2B: With Amphitheater ‐ 6,200 Seats ‐ Main Level Concourse ‐ 2 Seating Levels ‐ Site Plan
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Option 2B: Preliminary Design Concept
PAGE 52 COST & BUDGET
PAGE 53 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Considerations Affecting Cost –Also Affect Feasibility:
• Number of Seats, Building Area, Building Volume and Configuration
• Number of concourses and connections to renovated Mayor Civic Center
• Premium Amenities
• Operational Flexibility –e.g. telescopic seating and multifunction spaces
• Operable wall or operable glass to support outdoor events
• Orientation of the Arena –45 degrees or 90 degrees
• Volatility of construction market in general and unique market issues facing the Rochester, MN.
• Other
PAGE 54 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Master Project Budget The Master Project Budget format addresses all categories of cost to provide a complete project budget including:
o Site Costs (Similar among the options)
o Construction Costs (Vary by Building Volume, Area and Complexity)
o Furniture, Fixtures and Equipment Costs (FF&E – Similar for all)
o Development Costs (Similar for All)
o Project Contingency (Vary slightly)
PAGE 55 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
CONSTRUCTION COST COMPARISON Project Cost / SF Multiplier Comparative Construction Costs for Rochester (escalated to 2017) Cedar Park, TX (Austin) $196 1.49 $292
Allen, TX (Dallas) $207 1.42 $293
Independence, MO (Kansas $205 1.17 $240 City) Dodge City, KS $203 1.36 $276
Bangor, ME $299 1.08 $322
Note: All Costs shown are Construction Costs only and are provided for comparison purposes only. Rochester, MN specific costs are unique and unknown at this time. PAGE 56 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
MASTER PROJECT BUDGET SITE IMPROVEMENTS & DEMOLITION Site Acquisition
Site Utilities & Improvements
Site Preparation and Demolition
Environmental
PAGE 57 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
MASTER PROJECT BUDGET CONSTRUCTION COSTS General Requirements Site Work Site Improvements / Landscaping Concrete Foundations / Superstructure Concrete / Structural Precast / Architectural Precast Masonry Metals Structural Steel & Metal Deck / Metal Fabrication Wood & Plastics Rough Carpentry / Architectural Woodwork Thermal & Moisture Protection Waterproofing / Roofing & S.M. / Metal Panels Doors & Windows Doors, Frames, & Hardware / Overhead Doors / Glass, Glazing, & Curtainwall Finishes Specialties Toilet Partitions & Accessories / Miscellaneous Seating Systems Special Construction Miscellaneous Conveying Systems Elevators & Escalators Mechanical Plumbing / Fire Protection / HVAC Electrical Performance & Payment Bond Contractor Staffing & Fee Staff Costs / Contractor Fee Construction Contingency
PAGE 58 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
MASTER PROJECT BUDGET FURNISHINGS, FIXTURES & EQUIPMENT Artwork Athletic Equipment Basketball Floor / Baskets / Other Dasher Boards / Other / Zamboni Audio‐Visual including Scoreboards, TVs and Sound System Computer Equipment Communication Equipment Radios Press Facilities Food Service Food Service / Equipment / Portables / Smallwares Furniture including Premium Spaces Graphics & Signage Laundry Equipment Loading Dock Equipment Maintenance Equipment Window Washing Equipment Media Equipment Parking Equipment Seating Systems Loose Chairs Security Equipment Stage & Rigging Equipment Vehicles Waste Handling Equipment Miscellaneous Window Treatments Other FF&E Miscellaneous
PAGE 59 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
MASTER PROJECT BUDGET DEVELOPMENT COSTS
Architecture & Engineering Design Services / Reimbursables / Other Consultants Geotechnical & Soil Analysis Geotechnical Services / Other Consultants Testing & Inspections Marketing & Collateral Public Relations / Advertising Development Services Development Services / Reimbursables Legal Services Taxes, Insurance & Bonding Builder's Risk Insurance / General Liability Insurance / Professional Liability Insurance Permits & Regulatory Costs Building and Environmental Permits Operations & Pre‐Opening Costs Ground Breaking Opening Ceremony Pre‐Opening Miscellaneous Professional Services Other Development Costs Miscellaneous
PROJECT CONTINGENCY
Project Contingency
PAGE 60 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
MASTER PROJECT BUDGET FINANCING COSTS*
Construction Interest Construction Interest Reserve Funds Capitalized Interest Fund / Debt Service Reserve Fund / Working Capital Fund /Special Reserve Fund Finance Legal Services Borrower's Counsel / Bond Counsel / Bank Counsel / Tax Counsel / Trustee's Counsel / Other Finance Legal Costs of Issuance Ratings Agency Fee / Issuance Printing Costs / Financial Consultant / Financial Consultant Reimbursement / Trustee's Origination Fee / LOC Commitment Fee Closing Costs Issuer's / Lender's Closing Fee LOC Closing Fee Other Financing Costs Other Financing Costs
*No financing costs are included in the Master Project Budget at this time.
PAGE 61 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Conceptual Cost Summary*:
• 4,000 Seat Multi‐Purpose Arena: $55 – $60 Million
• 5,000 Seat Multi‐Purpose Arena: $60 – $65 Million
• 6,000 ‐ 6,200 Seat Multi‐Purpose Arena: $65 – $75 Million
• Ancillary Development TBD
* Assumes Approximately $325 / SF for Construction Costs and Approximately $425 to $440 / SF for Total Project Costs in the Rochester, MN, Market assuming a 2017 completion. These assumptions are preliminary and subject to change due the absence of complete design information and the volatility of the current construction market.
PAGE 62 NEXT STEPS
PAGE 63 ROCHESTER SPORTS & ENTERTAINMENT ARENA Preliminary Schedule STRATEGIC FEASIBILITY STUDY
PAGE 64 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY
Next Steps
• Select the preferred arena option
• Provide information to Destination Medical Center Corporation (DMCC)
• Provide information and recommendation to Mayo Civic Center Committee
• Detailed Financial Analysis / Economic Impact Study
• Complete Definitive Agreements
• Start design and pre‐construction planning in November of 2015 for project completion in October / November 2017
PAGE 65 STRATEGIC FEASIBILITY STUDY MAY 6, 2015